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The minister directed the two institutions that before granting of loan either for capital expenditure or for non-capital expenditure, the adherence to prudential norms must be carefully observedETEnergyWorld | March 08, 2018, 19:32 IST

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New Delhi: Power minister R K Singh has directed the two state-run financiers of the sector not to grant loans to discoms registering heavy losses.

Singh held a review meeting of the two lenders – Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) – on Wednesday. “The minister directed the two institutions that before granting of loan either for capital expenditure or for non-capital expenditure, the adherence to prudential norms must be carefully observed,” the power ministry said in a statement.

He noted that many distribution companies have been making heavy Transmission & Distribution (T&D) loses and it may be difficult for them to repay the loans.

Singh directed that discoms which are making losses of over 15 per cent will not be granted loans for capital or non-capital expenditure until and unless they draw up a roadmap for reducing the losses over a definite time frame not exceeding two years.